Markets
T

Akamai Technologies (AKAM) Q4 Earnings: What's in Store?

Akamai Technologies, Inc.AKAM is set to report fourth-quarter 2015 results on Feb 9. The company had reported a positive earnings surprise of 12.77% in the last quarter. It also delivered an average positive earnings surprise of 2.52% over the four trailing quarters.

Let's see how things are shaping up for this announcement.

Factors to Consider

Akamai is likely to benefit from the rising demand for cloud infrastructure solutions, security, mobile products and online video. This apart, the other positive factors for the company are growing mobile data traffic and demand for wireless broadband, growth in performance-driven advertising and dynamic transactions in the cloud.

Also, its partnerships with the likes of AT&T T , IBM, Orange, Qualcomm, Swisscom, Korea Telecom, Türk Telekom, Bangkok Bank and others are expected to boost top-line growth going ahead. Last quarter, the company expanded its partnership with Microsoft MSFT to offer content delivery network services for Microsoft Azure, which is expected to drive growth going ahead.

On the flip side, Akamai might be impacted by the slowdown in its Media delivery business and also in the over-the-top (OTT) video market as though consumers continue to shift from traditional videos, the rate of conversion has been lower than expected. Also, intense competition has kept pricing under tremendous pressure, particularly in the media segment, which is an added headwind.

For the fourth quarter, Akamai expects revenues in the range of $557 million to $577 million, representing 6% to 10% year-over-year growth.

Earnings Whispers

Our proven model does not conclusively show that Akamai is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Akamai currently has an Earnings ESP of -1.96%. This is because the Most Accurate estimate stands at 50 cents per share while the Zacks Consensus Estimate is pegged higher at 51 cents per share.

Zacks Rank: Akamai has a Zacks Rank #3 (Hold) which increases the predictive power of ESP. However, the company's negative ESP makes surprise prediction difficult.

Please note that we caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stock to Consider

Here's a stock worth considering that, as per our model, has the right combination of elements to post an earnings beat this quarter:

Time Warner Inc. TWX , with an Earnings ESP of +2.00% and a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

TIME WARNER INC (TWX): Free Stock Analysis Report

AKAMAI TECH (AKAM): Free Stock Analysis Report

AT&T INC (T): Free Stock Analysis Report

MICROSOFT CORP (MSFT): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

T MSFT AKAM

Other Topics

Earnings Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More